Are Snowmobiles "Motor Vehicles" Under SUM Coverage?

SUM coverage and snowmobiles were on the menu of topics decided by the Appellate Division Second Department on May 27, 2015 in State Farm Mut. Auto. Ins. Co. v. Jones, 128 A.D.3d 1074 (N.Y. App. Div. 2015).

William T. Jones sustained injuries in a snowmobile accident in Lewis County. The snowmobile that he was operating collided with a snowmobile owned by non-party Steven Roy and insured by Nationwide Insurance. The snowmobile that Jones was operating was owned by non-party Robert Perino and insured by the petitioner, State Farm Mutual Automobile Insurance Company (hereinafter State Farm). Jones settled for the $50,000 policy limit of the Nationwide Insurance policy and, after due notice, sought to recover an additional $50,000 under the supplemental underinsured motorist (hereinafter SUM) provisions of Robert Perino's policy with State Farm (hereinafter the policy). State Farm denied coverage on the ground that Jones was not an insured under the SUM provisions of the policy. Orange County Supreme Court Judge Colangelo found in favor of State Farm, granting a permanent stay of the demanded arbitration.

The Appellate Division reversed. State Farm's argument, which was accepted by the Supreme Court, was that a snowmobile is not a "motor vehicle" as that term appears in the SUM endorsement. State Farm relied on the definition of "motor vehicle" contained in the Vehicle and Traffic Law, which specifically excludes snowmobiles (see Vehicle and Traffic Law §§ 125, 2229). Thus, Jones was not insured for SUM coverage because he was not occupying a motor vehicle at the time of the accident.

The Appellate Court noted that the policy only covered one vehicle, the snowmobile. "We find that the policy, when read as a whole, is ambiguous as to whether the term "motor vehicle" in the SUM endorsement refers to the snowmobile, the only vehicle covered by the policy. Contrary to State Farm's contention, and the Supreme Court's determination, this ambiguity must be resolved "against the insurer and in favor of coverage" (Nationwide Mut. Ins. Co. v CNA Ins. Co., 286 AD2d 485, 487; see Shants, Inc. v Capital One, N.A., 124 AD3d at 759), without reference to the definition of "motor vehicle" set forth in the Vehicle and Traffic Law. Accordingly, the Supreme Court should have denied that branch of the petition which was to permanently stay arbitration on the ground that Jones was not covered by the SUM provisions of the policy at the time of the accident."

Conflict of Interest Decision:

Shelby v. Blakes, No. 2014-03887, 2015 WL 3604439, (N.Y. App. Div. June 10, 2015), involved a fee dispute between lawyers where the incoming counsel alleged ethical violations against the outgoing counsel, specifically the failure to inform the client of a potential conflict of interest with one attorney representing the driver and a passenger in the same lawsuit. Here, the original attorney claimed there was no conflict as this was a classic "hit in the rear" scenario and the counterclaim against the driver was specious.

The Appellate Division rejected the argument stating "Borda contends that since Earl was a passenger in a stopped vehicle which was struck in the rear, the driver of the stopped vehicle was clearly not at fault, and there was no conflict of interest (see Sayyed v. Murray, 109 AD3d 464). However, once the defendant asserted a counterclaim, the pecuniary interests of the driver conflicted with those of the passenger (see Kyung Seong Kim v. Metropolitan Suburban Bus Auth., 2008 N.Y. Slip Op 30858[U] [Sup Ct N.Y. County]; see also Alcantara v. Mendez, 303 A.D.2d 337). Therefore, the appellant's motion to disqualify Borda from receiving a portion of the attorneys' fees should have been granted, and the cross motion for an allocation of attorney's fees should have been denied."

"The general rule is that an attorney is not entitled to a fee in a personal injury action if the attorney violated the Rules of Professional Conduct (12 NYCRR 1200.0) by representing both the driver of an automobile involved in a collision and a passenger in that vehicle (see Quinn v. Walsh, 18 AD3d 638; Pessoni v. Rabkin, 220 A.D.2d 732; see also Doviak v. Finkelstein & Partners, LLP, 90 AD3d 696, 699). Rule 1.7(a) of the Rules of Professional Conduct (22 NYCRR 1200.0) provides, in pertinent part, with respect to conflicts of interests involving current clients, that a lawyer shall not represent a client if a reasonable lawyer would conclude that "the representation will involve the lawyer in representing differing interests" (Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.7[a][1] ). Pursuant to rule 1.7(b) of the Rules of Professional Conduct (22 NYCRR 1200.0) the potential conflict may be waived if the lawyer reasonably believes that he or she will be able to provide competent and diligent representation to each affected client, the representation is not prohibited by law, the representation does not involve the assertion of a claim by one client against the other in the same litigation, and each affected client gives informed consent, confirmed in writing."

Congratulations to Frank Scahill for a defense verdict on damages before Judge Faviola Soto in Bronx County on June 2, 2015 in Jessica Cozier v. Geyr Taxi Inc. (309093/12). Plaintiff was diagnosed with injuries including compression fracture of the L3 vertebral body anteriorly. In April of 2011, she underwent surgery at Beth Israel Medical Center who fused her sacroiliac joint due to instability.

Congratulations to Rich Brown for a defense verdict on damages in Kings County Civil Court before Judge Joseph on May 112, 2015 in the case of MARY HEINITZ v DANIEL H, JJUNG (Index Number: 300284/10). The plaintiff claimed a causally related cervical laminectomy and fusion. The jury deliberated for 40 minutes before returning a defense verdict.

Congratulations to Paul Duer for a defense verdict before Judge Ritholtz in Queens County on June 12, 2015 in Imran v R. Barany Monuments, Inc. (21083/12). Plaintiff underwent right-sided L5-S1 transforaminal lumbar interbody fusion. No prior history. We would have settled the case for $250,000. Plaintiff would take no less than $2 million. The jury gave $0.

Congratulations to Andrea Ferrucci of our firm, who heads our appellate department, for an important victory in Peculic v Sawicki from the Appellate Division, Second Department decided on June 17, 2015 (2015 NY Slip Op 05168) on appeal of the order of Judge Pineda-Kirwan of Queens County. Here, the plaintiff objected to psychological testing on a claim where the plaintiff alleged post-traumatic stress syndrome. The testing included administration of the Minnesota Multiphasic Personality Inventory-2, as part of the independent neuro-psychological examination. The plaintiff claimed the testing was invasive, citing the rule, "Where the mental or physical condition of a party is in controversy, the party may be required to submit to a medical examination (see Dillenbeck v Hess, 73 NY2d 278, 286-287; D'Adamo v Saint Dominic's Home, 87 AD3d 966, 970). However, a plaintiff who places his or her physical or mental condition in controversy will not be required to undergo an examination or objective testing procedure which is invasive, painful, or presents the possibility of danger to life or health (see D'Adamo v Saint Dominic's Home, 87 AD3d at 970; Lefkowitz v Nassau County Med. Ctr., 94 AD2d 18, 21)." The Appellate Division reversed the trial court, noting, "the plaintiff failed to establish that subjecting herself to the MMPI-2 would be invasive or harmful to her health (see Tidwell v Villaman, 100 AD3d 865, 866; Thomas v Mather Mem. Hosp., 162 AD2d 521, 523). Accordingly, the defendants' motion to compel should have been granted and the plaintiff's cross motion for a protective order should have been denied."

Allowable Fees in First Party No-Fault Cases: The maximum allowable legal fee in a first-party no-fault suit against an Insurance Carrier pursuant to Insurance Department Regulations [11 NYCRR] § 65-4.6(e) is $850. In 2009, the Court of Appeals determined attorneys' fees in a no-fault action are to be calculated based on the "aggregate of all bills for each insured" disputed in any action, up to a maximum of $850 (LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217 [2009]),

What is the allowable Fee in consolidated actions? In EMA Acupuncture P.C. v. Allstate Ins. Co., decided by the Supreme Court, Appellate Term, First Department on March 23, 2015, (47 Misc. 3d 126(A) (N.Y. App. Term. 2015), four related actions were consolidated on the consent of the provider.

Here, the court limited the recovery to $850. "We sustain so much of the order under review as limited the amount of any recovery of attorneys' fees to the sum of $850, the maximum allowable pursuant to Insurance Department Regulations [11 NYCRR] § 65-4.6(e). Since this provision provides that attorneys' fees in a no-fault action are to be calculated based on the "aggregate of all bills for each insured" disputed in any action, up to a maximum of $850 (LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217 [2009]), the $850 limit was properly applied to the claims at issue in this consolidated action, all of which involve the same parties and assignor, and arise from the same accident."

Commencing an Action When a Homeowner Dies Within the Two Year Statute: A typical provision in a homeowner's policy states, "[n]o action can be brought [against us (the carrier)] unless the action is started within two years after the date of loss." What happens when the homeowner dies within the statutory two year period to commence an action? CPLR 210( a), entitled "Death of claimant," states: "Where a person entitled to commence an action dies before the expiration of the time within which the action must be commenced, and the cause of action survives, an action may be commenced by his [or her] representative within one year after his [or her] death."

Is the representative of the deceased homeowner entitled to the CPLR 210(a) extension of time to bring the claim? Is the filing of a lawsuit within the two year time period set forth in the policy, a "condition precedent" to the right to pursue the claim in court?

The answer is that the CPLR 210(a) extension applies. See Dail v. Merchants Mut. Ins. Co., 74 A.D.3d 28, 30-31, 900 N.Y.S.2d 536, 537 (2010).

"We reject defendant's 'condition precedent' theory inasmuch as the cause of action to recover damages for breach of contract based on a fire or a homeowner's insurance policy existed at common law and was not created by the insurance statute containing the two-year period of limitations (see S & J Deli, 119 A.D.2d 652, 501 N.Y.S.2d 93; Insurance Law § 3404[e] ).1. It has never been incumbent upon an insured to plead and prove compliance with the applicable statute of limitations as a condition precedent in commencing a breach of contract action under the common law against an insurer. Moreover, we perceive no indication in the language of Insurance Law § 3404(e) indicating that the two-year period of limitations was intended to be in the nature of a condition precedent (cf. Kahn v. Trans World Airlines, 82 A.D.2d 696, 709, 443 N.Y.S.2d 79). We, therefore, conclude that the "death toll" in CPLR 210(a) is applicable to an action against an insurer where the policy at issue contains the two-year limitations period contained in Insurance Law § 3404(e)."